Fast Read: All You Need to Know About Loan Modification

Banks kept on giving out loans to anybody and everybody. The real estate market also profited from this since so many homes could be built and sold because it was so easy to get loans. Then, people weren’t able to pay the loans anymore. And then, the big bubble in the cash flow, the debt that was being spent faster than it was being paid of popped. The whole in the economy started the crash that everyone is experiencing now. Now, foreclosure signs are cropping up like mushrooms. People are looking for ways to stop foreclosure. This is why loan modification became so popular as a way to stop foreclosure.

What is loan modification?
Loan modification, simply put, is a change in one’s loan mortgage terms and conditions in order to make it easier for the borrower to make the payments. These changes are permanent and it can either create extensions or grace periods. It can also lower interest rates, monthly payments, and even lower the amount of the original loan itself. Loan modification is deferent from refinancing. With refinancing, one will get an entirely new loan. This means more paperwork. Loan modification is also easier since the loan is already pre approved.



How do I qualify for loan modification?
Banks and lender will look for a good reason for why you need loan modification help in the first place. The reason why you, the borrower, is in financial straits should be something that was unavoidable. Valid reasons include loss of income due to lay offs or reassignment, health problems, health bills, a death in the family, etc. Another important thing that one must know is that loan modification can only be done if the home in question is where you are living in right now. If it is just a secondary home or a vacation home then the one’s loan modification application will not be approved.